September 2022 Committee on School Finance/Permanent School Fund

THURSDAY
September 1, 2022

10:00 a.m. or upon adjournment of the PSF Corporation Meeting

COMMITTEE ON SCHOOL FINANCE/PERMANENT SCHOOL FUND – Room 1-104

Members: Tom Maynard, chair; Lawrence A. Allen, Jr., vice chair; Keven Ellis; Patricia Hardy; Marisa Perez-Diaz. A quorum of the State Board of Education may attend the committee meeting and discuss items on the committee agenda. A quorum of the Committee of Investment Advisors to the Permanent School Fund may attend the committee meeting and discuss items on the committee agenda.

Public testimony – Individual testimony will be taken at the time the related item comes up for committee discussion or action. The procedures for registering and taking public testimony at State Board of Education committee meetings and general board meetings are provided online.

1. Discussion of Proposed Repeal of 19 TAC Chapter 129, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting

This item provides an opportunity for the committee to discuss the proposed repeal of 19 Texas Administrative Code (TAC) Chapter 129, Subchapter A, Student Attendance Allowed, and Subchapter B, Student Attendance Accounting. The proposed repeal would implement House Bill (HB) 3, 86th Texas Legislature, 2019, which removed the State Board of Education's (SBOE's) rulemaking authority related to student attendance. Statutory authority is the Texas Education Code (TEC), §48.004, as transferred, redesignated, and amended by HB 3, 86th Texas Legislature, 2019.

COMMITTEE – DISCUSSION
SBOE – NO ACTION

2. Per Capita Apportionment Rate for the 2022-2023 School Year

A per capita apportionment rate for each school year is set by the commissioner of education based on an estimate of the amount available for expenditure from the Available School Fund (ASF). Agency staff will propose a recommended rate for the 2022-2023 school year at the September 2022 meeting of the Committee on School Finance/Permanent School Fund. Statutory authority is the Texas Education Code (TEC), §§48.004, 48.251(c), and 43.001(b).

COMMITTEE – DISCUSSION
SBOE – NO ACTION

3. Report on Permanent School Fund Securities Transactions and the Investment Portfolio and Ratification of Purchases and Sales for the Months of May and June 2022

This item provides an opportunity for the committee and board to receive a report on Permanent School Fund (PSF) Securities Transactions and the Investment Portfolio and consider ratification of purchases and sales of investments executed in the portfolio of the PSF for the months of May and June 2022. Statutory authority is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

4. Report on Permanent School Fund Liquid Account and Ratification of Purchases and Sales for the Months of May and June 2022

This item provides an opportunity for the committee and board to receive a status update report on the liquid account and consider approval of the purchases and sales of investments executed in the liquid account for the months of May and June 2022. Statutory authority is the Texas Constitution, Article VII, §2 and §5; Texas Natural Resources Code (NRC), §51.414, as repealed by SB 1232, 87th Legislature, Regular Session, 2021; and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

5. Second Quarter 2022 Permanent School Fund Performance Report

The performance measurement consultant to the Permanent School Fund (PSF), BNY Mellon Asset Servicing, will report on the investment performance during the second calendar quarter 2022 and cumulative investment performance of the various portfolios of the PSF.  This item provides the opportunity for the committee to discuss in depth, various issues related to portfolio management such as risk characteristics of portfolios and portfolio attributes. Statutory authority is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION

6. Determination Regarding Whether Transfers May be Made from the Permanent School Fund to the Available School Fund

This item provides an opportunity for the committee and board to review the requirement in Article VII, §5(a)(2) that states, the total amount distributed over ten years cannot exceed the total return on all investment assets of the Permanent School Fund (PSF) over the same ten-year period. The board will determine whether transfers may be made from the PSF to the Available School Fund (ASF) in fiscal year 2023. Statutory authority is the Texas Constitution, Article VII, §2 and §5, and 19 Texas Administrative Code (TAC) Chapter 33.

COMMITTEE – ACTION
SBOE – CONSENT

7. Discussion of 19 TAC Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules

This item provides the opportunity for the committee to discuss potential amendments to 19 Texas Administrative Code (TAC) Chapter 33, Statement of Investment Objectives, Policies, and Guidelines of the Texas Permanent School Fund, Subchapter A, State Board of Education Rules. Statutory authority is the Texas Constitution, Article VII, §5(a) and (f).

COMMITTEE – DISCUSSION
SBOE – NO ACTION

8. Report of the Permanent School Fund Executive Administrator and Chief Investment Officer

The Permanent School Fund (PSF) executive administrator will report to the committee on matters relating to the management of the PSF and the Charter District Reserve Fund.  The report may present information on historical and current status of Fund holdings, current and proposed investment policies and procedures, and historical and current Fund performance and compliance. The administrator may update the board on the bond guarantee program, the status of requests for proposal, or for qualifications and current contracts for services and other administrative activities undertaken on behalf of the board.  The administrator may provide an update on the PSF distribution or on the effect of legislation impacting the PSF.  The administrator may provide an analysis of current and future investment market conditions, focusing upon the impact on the holdings of the PSF. Statutory authority is the Texas Constitution, Article VII, §2 and §5; and 19 Texas Administrative Code (TAC), Chapter 33.

COMMITTEE – DISCUSSION
SBOE – NO ACTION